THE decision by Drinagh Co-Op, to not only hold their May milk price in the face of a 0.5c per litre Carbery cut, but to commit to this price to year end, has been praised by the IFA’s National Dairy Committee chairman Sean O’Leary.
Noting that the West Cork dairy co-op has been consistently among the top payers in a particularly difficult year, he added that this is the type of signal which, as markets have begun to recover, dairy farmers need to restore their badly shaken confidence. Mr O’Leary called on those co-ops which have yet to decide on their May milk price to hold their May price and, for those and all other co-ops, to commit, at worst, to hold their May price till year end, and implement increases as recovering markets justify.
‘It is remarkable that one of the best paying co-ops is making this move, and it should give every other milk purchasing co-op pause for thought,’ he said.
‘Farmers are now producing milk below cost all around the country. The average milk producer is close on €1,000 in the red for May 2016, and simply cannot take any more pain,’ he said.
‘Dairy markets are firming and while the GDT weighted average price remained unchanged last week, butterfat and SMP prices continued to strengthen, Mr O’Leary pointed out.
‘At EU level, Dutch quotes this week are for butter prices up 13% to €2,950/t. In the last month, SMP average prices have increased by €80/t to above intervention equivalent, butter prices have lifted by €250/t, while whey powder has increased by €70/t – a massive 13% uplift.
‘All indications are that UK, French and German milk output is slowing or down, so that the fundamental factors affecting dairy prices appear set to hold and continue promoting further price increases,’ he added.
‘In this context, and bearing in mind the intolerable levels of pressure on farmers’ cashflow and incomes, it behoves every co-op to examine every aspect of their structure and operation to find what savings they need to replicate the Drinagh commitment – not just in the best interest of their suppliers, but also to protect the sustainability of the entire dairy sector,’ Mr O’Leary concluded.